Coffee falls as possible large offseason crop looms

COFFEE

General Comments: Futures were lower again yesterday as the threat of big offers from Brazil kept would be buyers sidelined. Talk of a big offseason crop coming this year kept ideas that there will be a lot of Coffee for buyers around. Brazil has Coffee to sell, but production in other countries is more problematical. London prices were able to rally. The crops in Vietnam need rain but have not been getting very much if any, and there is no relief in sight. Producers there say losses could be 25% of the production of last year, and offers from there have started to move lower in volume. Ideas of big supplies, mostly from Brazil, keep the selling alive. Reports of rust in Central America and the production cuts that it are still in the press, and rust is now reported in Peru. Central America could lose at least 20% of the total crop this year. Losses next year could be 30% or more of the crop. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop, although there are a few showers around. There is some talk the drier weather could stress trees. Production ideas remain big there. Vietnam producers there talk about the potential for 25% crop losses due to prolonged drought in the Central Highlands. Central America crops are mostly harvested. Colombia is reported to have good conditions, but some now talk of less than expected production.

Overnight News: Certified stocks are higher today and are about 2.724 million bags. The ICO composite price is now 134.49 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 5 contracts were delivered today against March futures and that total deliveries for the month are 113 contracts. Vietnam exported 100,380 tons of Coffee in February,down 54% from January and half the exports from last year.

Chart Trends: Trends in New York are mixed. Support is at 140.00, 137.00, and 134.00 May, and resistance is at 145.00, 147.00, and 149.00 May. Trends in London are up with objectives of 2230 May. Support is at 2170, 2160, and 2140 May, and resistance is at 2220, 2230, and 2250 May. Trends in Sao Paulo are mixed. Support is at 177.00, 174.00, and 171.00 September, and resistance is at 183.00, 185.00, and 187.00 September.

COTTON

General Comments: Futures were higher yesterday. Demand is still said to be strong, but some buyers are backing away from the market after the rally in prices. New export demand data will be released tomorrow by USDA. The rally is coming at a time when certified stocks are building as well. The current low new crop prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some producers in the Delta are noting the recent price rally and might decide to plant more Cotton this year. Some are wondering if planted area might be lower this year here in the US due to weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. The plantings intentions report will be released at the end of the month.

Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average mostly below normal early this week and then near to above normal, with warmest readings in the Delta. Texas will get dry weather. Temperatures will average above normal. The USDA spot price is now 81.91 ct/lb. ICE said that certified Cotton stocks are now 0.424 million bales, from 0.415 million yesterday. ICE said that 0 contracts were delivered yesterday and that total deliveries for the month are 1,542 contracts.

Chart Trends: Trends in Cotton are mixed. Support is at 86.10, 85.80, and 85.60 May, with resistance of 88.70, 88.90, and 89.20 May.

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